Direct Shipment of Wine to Individuals Is Illegal

question 84

Multiple Choice

Direct shipment of wine to individuals is illegal. Some wineries want the law revoked. They argue that the ability to ship directly to consumers helps small wineries and that shipping bans unfairly protect home-state wineries, raising prices to consumers. Others argue that the bans allow states to collect tax revenues and to keep wine from being sold to minors. What would most economists say about whether this ban should stay or be eliminated?

• A) Because there would be people harmed, lifting the ban would not be Pareto optimal. Therefore, eliminating the ban is a bad policy.
• B) Economists would argue that competition is good and the ban prevents competition. Therefore, the ban should be lifted.
• C) Lifting the ban would make taxes less equitable. Therefore, the ban should remain.
• D) There are benefits to lifting the ban but also costs, and unless we know these costs and benefits, we cannot decide.

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Definitions:

Profit

The difference between what it costs to make and sell a product and what a customer pays for it.